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Personal Loan can also be defined as a Loan taken by an individual to fulfil his needs or to generate more income from the loan amount than the amount of interest paid to the Bank or a Financial Institution.
Ideally a personal loan is provided by the Bank or Financial Institution after the individual agrees to transfer his salary to their prescribed account and monthly EMI will be deducted from his salary every month till his EMI's are completed.
Computation of EMI's is done by the Bank's or the Financial Institutions System and is not calculated manually by the person assisting you with the Loan Formalities.
Interest is calculated in 2 ways on any personal Loan:
a) Reducing Balance method
b) Fixed rate
Under reducing Balance method, the Bank or the Financial Institution calculates the amount of interest to be paid by the individual along with the principal amount based on the loan outstanding. If the person has partially repaid his loan during the loan tenor, his interest will be calculated only for the remaining loan amount and not on the complete loan amount.
Under fixed rate, the rate of interest is fixed on the loan amount and does not change with the change in outstanding.
Generally as a normal business practise and for easy calculation, fixed rate is provided to customers by the Bank or Financial Institution staff but the actual rate calculated by the Bank is on reducing balance method.
Also, people sometimes get better interest offer or are fedup with the services offered by their current Bank or Financial Institution and want to change the same. The Bank of Financial Institution offering such facilities and is assisting the individual in shifting his Loans or liabilities is called the Bank that is taking over the liabilities or is involved in the process of a Loan takeover.
The takeover process will be explained in detail in the next part-------------stay tuned.
Generally Personal loan is like an unsecured loan, as it is used in different ways like children marriage, medical expenses and many more. You get Personal loan amount from 2 to 10 lakhs & repayment period upto 5 years. But you can search for low emi personal loan in India through Easyloansindia online application which provide an option of search and compare in all available banking or non-banking firms at no cost.
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